Many Mormons inventors have made many inventions using magnets.
Harvey Fletcher invented hearing aids. Think of all the people that can hear now because of Harvey Fletcher. Hearing Aids use tiny electro-magnets to operate.
Harvey Fletcher is Mormon.
There are many smart people in the World. Dr. Mengele was World renown for his great I.Q. But Dr. Mengele was also known for being one of the most ruthless unfeeling inhuman humans in history.
His "experiments" on human subjects without anesthetics, includes surgically connecting twins together to turn them into Siamese twins, cutting parts of people's bodies off without any pain killers, just to gauge their reactions, to be recorded efficiently and "scientifically", and numerous other such horrendous experiments conducted against humans, are too many to be recounted.
All in the name of Science.
Dr. Mengele was NOT Mormon.
Dr. Mengele was however a card caring NAZI, and conducted his horrible experiments against humans, during World War II, in Germany.
Dr. Harvey Fletcher, is Mormon.
Note the difference.
The Television and the Video Camera was invented by a Mormon. The Television uses electro-magnetism extensively to operate. The Mormon inventor's name is Philo Farnsworth.
Stereophonic Sound, and the first electric amplified acoustic guitar, both use electro-magnetism extensively in their design. The first was invented by Harvey Fletcher, the second was invented by Alvino Rey. Both are Mormon.
So the joke is this. Mormons have had a massive impact in the World. One area of impact has been on the many inventions that you use in your daily life, and that includes inventions that use electro-magnetism.
Mormons have made inventions not like Dr. Mengele and his ilk have made awful inventions, rather, Mormons have made invention that help people to live better and happier lives.
It is all part of the concept of being the Good Samaritan.
And being the Good Samaritan is much better than being... the good Nazi.
So that is the joke. The joke is how effective and amazing Mormons have been in all area's of scientific research, and especially in the area of electro-magnetism.
Non-Mormons are very impressed with Mormons in that regard, and therefor that is the source of the joke.
After all the Television screen you are using to view this answer was invented by a Mormon (Philo Farnsworth) and the word processor you used to type your question into the computer was invented by another Mormon (Alan Ashton).
The internet itself started out at the University of Utah and a few other colleges. As the internet has grown and expanded people have become more and more aware of the people who have actually been having a major positive impact in their lives, because of the various helpful inventions that they enjoy.
With the touch of a few buttons on their computer keyboard, or with merest flick of their computer mouse, they are able to discover that more times than not, it was a Mormon that made these things available to the masses, in the first place.
Often they were lone inventors in their garage, or at a small obscure location, working feverishly through days and nights, discovering great things to help fellow human beings.
So go to Chuck E Cheese. Celebrate life. Have some salad and some pizza and watch the show.
Who created Chuck E. Cheese? The restaurant that uses robots not to kill, but rather to entertain and delight children and bring families closer together?
It was same person who began video games.
Nolan Bushnell.
Nolan Bushnell went to the University of Utah.
Nolan Bushnell grew up as a Mormon.
So there is a lot that is funny about the Mormon/Magnet joke. And there is a lot that is true about it as well.
Because Mormons are generally speaking very forward thinking people, and are in the for-front of many things that bring joy to the world.
Magnets and magnet technology, is certainly one of the ways that Mormons have used, to help people live better happier lives.